"Essentially, our view would be that the guarantee scheme of any kind would have been alright as a short-term measure," he told reporters when asked about the government's plans to extend funding limits under the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE).
He further said that if the government is looking to carry on with the scheme for a longer term, there is a need for better pricing and proper identification of the beneficiaries.
In case of defaults, the lending bank gets the money from a special corpus created by the government.
Meanwhile, Mundra also dismissed a suggestion from All-India Association of Industries to relax NPA recognition norms beyond the current 90-day period.
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"The regulations, as they are, they have evolved over a long period of time," he said, stating that it has come down to global practice of 90 days from the earlier one-year over the last two decades.
He asked entrepreneurs to report any stress at the earliest so that banks can hand-hold the enterprise out of the situation.
When asked about the bearing of the upbeat US jobs data on policymaking, Mundra said RBI's policies cannot be dictated by every data point originating from across the world.
"If we keep on looking at each data point which emerges globally, then probably policy formulation would become difficult. Let's not worry too much about the emerging US data," he said.